Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  Equity REITs Have Shined Relative To Financials Over The Past 15 Years
Posted Under: Sectors
Supporting Image for Blog Post

 

View from the Observation Deck 

  1. On September 16, S&P Dow Jones Indices will be adding an 11th sector to the S&P 500 Index: Real Estate Investment Trusts (REITs), according to its own release.
  2. Currently, REITs are classified as an industry group within the financial sector. Today's chart shows the relative performance of equity REITs and Financials for standard time periods.
  3. The only time that Financials outperformed equity REITs was for the five-year period ended 5/31/16 (see chart). The strong showing by REITs, as well as extensive analysis and feedback from investors and analysts, led to the decision to spinoff equity REITs as its own sector, according to S&P Dow Jones Indices.
  4. It is important to note that equity REITs have benefitted from the decline in interest rates over the past 15 years, in our opinion. From 5/31/01 to 5/31/16, the federal funds target rate (upper bound) fell from 4.00% to 0.50%, while the yield on the 10-Year Treasury Note dropped from 5.38% to 1.85%, according to Bloomberg.
  5. Year-to-date through May, investors funneled an estimated net $3.21 billion into Real Estate mutual funds and exchange-traded funds, compared to net outflows totaling $4.89 billion for the Financial category, according to Morningstar.

This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The FTSE NAREIT All Equity REITs Index is a free float adjusted market capitalization-weighted index that includes all tax qualified REITs listed on the major U.S. exchanges, while the S&P 500 Financials Index is a capitalization-weighted index comprised of financial constituents.

To Download a PDF of this post, please click here.

Posted on Tuesday, June 28, 2016 @ 1:05 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
S&P 500 Index Companies Continue To Reward Shareholders
How Some Major Bond Indices Have Fared Over The Past Five Years
The Corporate Cash Stash Continues To Inch Higher
The Outlook For 2016 Earnings Indicates Recovery Mode For Q2, Q3 & Q4
Snapshot of U.S. Equity Styles/Market Caps
A Snapshot Of European Equities
Let's Get Small: Focus on Small Caps
A Snapshot Of Bond Valuations
U.S. Crude Oil & Natural Gas Rig Counts Are Still Falling
Gold & Silver Miners Outperforming The Underlying Metals In 2016
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.